HC Deb 08 June 1989 vol 154 cc361-2
11. Mr. Arbuthnot

To ask the Chancellor of the Exchequer what is the latest official projection for the growth of manufacturing investment in 1989.

12. Mr. Gerald Howarth

To ask the Chancellor of the Exchequer what is the latest official projection for the growth of manufacturing investment in 1989.

Mr. Lawson

The latest DTI investment intentions survey, published in December, projected manufacturing investment in constant prices to rise by a further 11 per cent. in 1989 on a year earlier. The latest CBI "Quarterly Trends Survey", published in April, confirms this buoyant outlook.

Mr. Arbuthnot

Is it not clear that it is the policies of the Government that have created the climate where manufacturing investment, output, profits and productivity are all increasing satisfactorily? Can my right hon. Friend say how long and to what extent that trend is likely to continue?

Mr. Lawson

As far as I can tell my hon. Friend the prospects are very good indeed. We now have a situation in which business investment is at the highest proportion of GDP that it has ever been in our history. Company profits are high; company confidence is high. Therefore, the prospects for further investment are also excellent. As for manufacturing industry, it is interesting that during the period that I have been Chancellor of the Exchequer the average annual growth of manufacturing investment has been 9 per cent. compared with the period of the whole of the last Labour Government, which was roughly the same period of time, or a little bit less, when the growth of manufacturing investment was only 2.3 per cent.

Mr. Howarth

While welcoming the record rate of investment in manufacturing industry that has taken place under the Conservative Government, may I tell my right hon. Friend that nowhere in the United Kingdom is there more evidence of the revitalisation of British manufacturing industry than in the west midlands where the latest quarterly report of Walsall chamber of commerce shows that no fewer than 46 per cent. of companies are revising upwards their plans for manufacturing investment this year.

Mr. Lawson

I am particularly glad to hear that from my hon. Friend. Indeed, as a Member representing a midlands constituency myself, I am well aware of the successful economy of the midlands and the reinvigoration of the midlands and the high degree of investment that is going on there. Of course, as my hon. Friend will be the first to admit, it is not something confined solely to the midlands; this is now occurring nationwide.

Mr. Pike

Does the Chancellor recognise that his complacency hides the wide regional discrepancies between investment in manufacturing industries? Is it not a fact that, if there were more investment in our key manufacturing regions, the Government would do a lot more to improve the unemployment figures and our balance of payments? Does he recognise that investment in the north-west region—a key manufacturing region—according to the Government's latest available figures, is 38 per cent. below the 1979 level?

Mr. Lawson

There have always been differences between different regions, and there always will be. This is not something new. But what I find extraordinary in the question asked by the hon. Gentleman, and, indeed, by most, if not all, Labour Members, is their exclusive concern with manufacturing industry and manufacturing industry's investment. Manufacturing industry and manufacturing industry's investment are indeed very important, but the whole of the rest of British industry is important too. Some time hon. Gentlemen should recognise that the other 75 per cent. of the economy does in fact exist.

Mr. Orme

Will the Chancellor address himself to the fact that, if we are going to do anything about the balance of payments deficit, we have to manufacture to export? What has happened to our manufacturing exports over recent years? How does he explain those?

Mr. Lawson

I am glad to say that our manufacturing exports over recent years have done extremely well. Indeed, total exports, in which manufacturing accounts for a very large part, in the last three months were 8½ per cent. in volume terms above a year ago.

Mrs. Peacock

Does my right hon. Friend agree that investment in manufacturing industry, which is important to many of us who represent such areas, has been absolutely tremendous in recent years, especially in Yorkshire? Does he agree that that is a sign of confidence in the future economic success of the country, and that, instead of decline and dereliction, we now have many new factories and many new jobs?

Mr. Lawson

My hon. Friend is quite right, and I know the very great concern and interest that she has always shown in business and industry in her own constituency. It is indeed a striking fact, as I pointed out a moment ago, that over the past five years manufacturing investment has been growing at the rate of 9 per cent. a year, and it is set to grow still further.

Mr. John Smith

Can I ask the Chancellor the same question that I asked him yesterday, but which he did not answer? By how many percentage points has investment in manufacturing industry increased since 1979?

Mr. Lawson

Investment in manufacturing industry in quantum is only slightly above what it was in 1979, but it is, of course, heading still further up. Manufacturing output has also risen very sharply indeed under this Government, unlike under the last Labour Government, when manufacturing output actually declined.